How To Make Money: Intro
Hello dear,
Today, I’m excited to begin our “Making Money” series!
Simply put, we’ll talk about how to make more money.
- “What classes should I take in college?”
- “Should I even go to college?”
- “How do I get a job?”
- “How do I write a cover letter/ resume?”
- “What are others ways to make money?”
And so on.
These are questions I’ve either (a) asked myself or (b) heard before.
Chances are, so have you.
Finally, we’ll answer them!
Onward.
Why Talk About Making Money?
Some people might scoff at the thought of increasing income.
“This isn’t what you should value!” they say (I’ve seen them before on this very blog).
And to be honest I agree! Making money just for the sake of making money doesn’t fit my idea of “time well spent.”
Go back through my letters. You’ll find I talk a loooot about saving and investing money.
I did this for a good reason! Those two are the most important skills you need to live a life free from financial stress.
However, some people really live paycheck to paycheck (I put emphasis on the word really because most people use that as an excuse and still buy coffee at Starbucks, still commute to work, still get the latest gadgets, yada yada yada…).
Remember, the vast majority of people should focus on saving money.
But if you can’t save another cent? You should focus on making more money.
That’s it!
How Do You Make Money Anyways?
First, we need to agree on the same “money-making philosophy.”
This will be helpful for future letters. Also, it’ll assure people I won’t write about “get-rich-quick schemes.”
My philosophy is different. Here it is:
If you wish to make money, serve someone in a way they’d pay you for.
That’s it!
Sidenote: Emphasis on the words “pay you for.” Serving more people doesn’t necessarily mean you’ll make more money (I serve about 5,000+ people with this blog and don’t make any money from it).
Find something people are willing to pay for, and deliver it to them.
Once you do that, you can multiply the amount you make by increasing the amount of people.
Ahh… The beauty of Capitalism. The more you want, the more you have to give.
Here’s the catch: Serving more people also means more pressure.
Don’t take it from me. Take it from Evernote’s founder, Phil Libin:
“People have this vision of being the CEO of a company they started and being on top of the pyramid. Some people are motivated by that.
But that’s not at all what it’s like.
What it’s really like: everyone else is your boss — all of your employees, customers, partners, users, media, are your boss. I’ve never had more bosses and needed to account for more people today.” -Phil Libin
Yes, Phil Libin is a very wealthy man. But he also had to serve lots and lots of people.
Keep that in mind before you pick a way to make more money (we’ll talk more about this in a future letter).
Sidenote: For more glimpses into the hectic life of a company founder, follow Spanx’s founder, Sara Blakely, on Instagram. She’s laugh-out-loud hilarious, but she’s also one of the hardest working people I’ve ever seen.
Two Ways To Make Money
I’ll divide the next few letters into two different categories.
“Why?”
Because these two categories pretty much cover all the different ways in which you can make money.
Those two categories are: salaried work, and nonsalaried work.
Sidenote: I won’t talk about making money from investing in stocks. Simply because I spent the last 14 weeks doing so.
Salaried Work
This is the most common way of making money.
You work for someone, they pay you a predictable amount.
The amount is predictable because productivity is hard to measure. So whether you’re more productive or less productive any given month does not affect your income.
Sidenote: Of course, sometimes you are so productive you deserve a reward (like a raise or a bonus). But this rule varies a lot depending on the job.
Nassim Nicholas Taleb would classify this way of making money as a “Mediocristan” way.
I’ve talked about this before, but here’s a refresher:
“You can think of Mediocristan as the land where things are mundane, obvious and predictable. e.g.: If you have a normal job and make a normal income, you know that no singular event will suddenly make you rich. It will take years of saving and investing, day by day.”
Although the word sounds negative, there is nothing wrong with Mediocristan.
Why? Because remember you are only serving one person. Therefore it is (typically) much much less stressful than the alternative.
Nonsalaried Work
This way of making money is far less common.
Some people call this “side-hustle” if they have a job, and “entrepreneurship” if they don’t.
Here, it’s harder to predict how much money you’ll make each month (if you make anything at all).
Nassim Nicholas Taleb would classify this way of making money as an “Extremistan” way.
Here’s a reminder of what that is:
“You can think of Extremistan as the land where things are highly volatile, accidental, and unpredictable. This can be good or bad. e.g.: If you take all your savings and bet on Bitcoin, you can lose it all or become very rich in a single minute.”
Of course, since you depend on yourself, stress levels are usually much higher (Google “founder depression” to find countless articles on the subject).
“Why would anyone willingly subject themselves to this??”
There are many reasons.
Since we’re talking about finance, here’s the financial reason:
In this situation, productivity is more directly correlated with reward.
Let’s say you found something people want and started selling it to them. The more you sell, the more money you’ll make.
Therefore, how much money you make is only limited by how much you can sell (hence why founders are known to sleep very little and work very hard).
Sidenote: This does not mean you should start a business just to make money! That is a terrible idea. Remember it’s really hard work, and it kills your social life. We’ll talk about this more in detail in a later letter.
For now, that’s it for today!
Today, we kickstarted out “Making Money” series! Also, we learned:
- Why we’re talking about making money.
- How you make money (by serving others).
- And the two categories of making money (salaried work and nonsalaried work).
See you next week (follow the series here to be notified).
Be well.
R
P.S.: Has anyone here tried Simple? I really love everything about this company, but I want to make sure others have had a great experience with them (before I switch completely).
P.P.S.: One of my first mentors was a man named Jerry Weintraub. Unfortunately, he passed away a few years ago. If he were alive, today would have marked his 80th birthday. If you’re looking for an incredibly inspiring book to read, check out Jerry’s autobiography “When I Stop Talking, You’ll Know I’m Dead.” If you’re more into documentaries, check out his documentary “His Way.” I guarantee you’ll be entertained. At the same time, you’ll learn a lot (which classifies as time well-spent!). Happy birthday Jerry.
Since I write about finance, legal jargon is obligatory (because the guys in suits made me). Before following any of my advice, read this disclaimer.
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